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On August 27th, the federal Department of Finance released draft legislation setting out “reportable transactions” as well as advisor and taxpayer reporting responsibilities to deal with “aggressive tax planning.” STEP Canada’s Technical Committee (Tax), prepared a letter outlining STEP’s concerns with this legislation, following up on the letter it submitted in response to the proposals released by Finance back in May. For more please see the letter submitted to the Department:

July 2010: STEP Canada responds to Finance’s proposals designed to crack down on “aggressive tax planning”

In the 2010 Federal Budget, the Department of Finance stated that combating aggressive tax planning will require the introduction of rules to mandate taxpayers and their advisors to report certain types of tax transactions. The Department issued a Backgrounder on May 7, 2010, describing its initial Proposals, and sought the views of stakeholders such as STEP Canada.

The approach taken in the Proposals is to automatically equate a “reportable transaction” with an “avoidance transaction.” However, the term “avoidance transaction” only appears in the Income Tax Act, under ss. 245(3), when defining transactions that could be subjected to the General Anti-Avoidance Rule. STEP Canada has expressed its views on this approach, and other elements of the Proposals. For more please see the letter submitted to the Department:

April 2010: STEP Canada’s response to Finance’s Employee Life and Health Trust proposals

The lack of a broad legislative regime to govern Health and Welfare Trusts, as well as perceived concerns about abuses by employers in the utilization of these trusts has resulted in proposals from the federal Department of Finance to ‘accommodate employee life and health trusts.’ While STEP Canada welcomes these proposals as a move in the right direction, it is concerned about the tight constraints evident in the Proposed Rules. This is STEP Canada’s submission in response to the ELHT proposals:

The last version of the Non-Resident Trust and Foreign Investment Entity proposals that STEP Canada lobbied against back in 2007-2008 were not enacted before Parliament was dissolved in September 2008. In the 2009 federal budget the Department of Finance said it would review the outstanding proposals before proceeding with measures in this area. Then in the 2010 budget, Ottawa reintroduced this controversial initiative, with some not so minor amendments designed to “simplify” these complex provisions. STEP Canada has prepared a submission in response to the latest proposals. To read it click the following link:

STEP Canada is continuing its lobby efforts against the Non-Resident Trust and Foreign Investment Entity legislation, first introduced in the 1999 federal budget. In the eight years since then, there have been six different versions of the Bill. STEP Canada has been active all along in its lobbying efforts to point out the difficulties presented by the legislation for practitioners and their clients.

On December 12th, STEP Canada appeared before the Senate Committee on Banking, Trade and Commerce to raise its concern about the proposed NRT/FIE rules. We were the only witnesses to appear.

The following day, it was announced that the legislation would not be handed back to the House of Commons for passage, and put off until the next session of Parliament.

Prior to testimony by the Department of Finance before the Committee on January 30th, STEP Canada made a supplementary submission. Please see below.

The Committee meeting on the 30th was short. The Chairman announced that he had secured an agreement with Finance Minister Jim Flaherty for Finance officials to find resolutions to concerns that arose from the witnesses who testified in December. Another meeting -- when Finance will be providing clause-by-clause explanation – will be scheduled in the coming weeks. For more details, please see the transcript below.